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Entrepreneur
Kurra Bewarse
Username: Entrepreneur

Post Number: 3388
Registered: 05-2011
Posted From: 65.35.45.47

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Posted on Friday, March 05, 2021 - 1:11 pm:   

FLGT Fulgent Genetics giving shareholders a booster shot with big earnings upside (88.21 +2.68)

Fulgent Genetics (FLGT +4%) shareholders are getting a booster shot today although the stock is down from its highs. The stock is up sharply after reporting monster Q4 earnings results last night. FLGT has rapidly scaled up to become one of the top providers of COVID-19 testing in the country. It currently can process more than 60,000 tests per day. Throughout the pandemic, the company has been seeing booming demand.

FLGT caught our attention in recent months owing to a few huge guidance increases. On November 9, FLGT upped its full year guidance from $135 mln to $235 mln, then it quickly upped that to north of $300 mln. The final 2020 revenue number was $421.7, mln and the company's guidance for 2021 amounts to $800 mln. As you can see, even Fulgent has had trouble keeping up with its surging revenue targets.

Everyone was expecting big Q4 numbers from Fulgent, but not this big: EPS of $6.20 vs consensus of $4.05 and revenue of $295 mln vs the $199 mln consensus. FLGT also guided Q1 ($325+ mln) and FY21 revenue well above expectations.

Naturally, one might wonder how long FLGT can keep this up as the country gets vaccinated in 2021. This is a fair question, and we have some skepticism ourselves. However, it's important to note that Fulgent does provide a lot more than just COVID-19 tests. Customers use its genetic tests for hereditary cancer detection, cardiovascular genetics, neurological genetics, reproductive health, and many others. At this point, FLGT has one of the largest, most diversified genomic test menus in the industry, and further new tests are in development.

Beyond just the revenue benefit, what the pandemic has really done for FLGT is put its name on the map. This year, CEO Ming Hsieh says Fulgent "made inroads with numerous new customers, established new reimbursement agreements, expanded [its] capacity and commercial capabilities, and ha[s] grown [its] direct-to-consumer genetic testing platform, Picture Genetics."

So even after the country moves on from COVID-19, we think there could be a lasting impact, if likely not at the big numbers it's producing now. The pandemic has opened a lot of doors for Fulgent. Many institutions had never heard of Fulgent before the pandemic. However, with the company proving that it can deliver large volumes of high-quality tests in a quick and efficient manner, FLGT has been able to sign deals with large customers for its other tests.

Bottom line, we were expecting a huge Q4 result from Fulgent, but this was even better than we expected. Also, the company's 90% revenue growth guidance for 2021 indicates that COVID-19 testing will remain robust this year. Plus, FLGT has also begun using its capabilities to aid in identification and screening of potential new strains and mutations. And while COVID-19 tests are a big driver right now, FLGT is not a one-trick pony, as it has a large platform of genetic tests. The pandemic has really raised its profile, which has led to new contract wins for its other tests.

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